InfraCo to rectify bandwidth wrongs

ADSL South Africa (Broadband South Africa), 27 May 2007

To rectify bandwidth wrongs created and sustained by Telkom seems to be InfraCo’s top priority.
 
New state owned broadband company, InfraCo, ‘…plans to break Telkom’s stranglehold on local and international backhaul bandwidth to drive down broadband prices’ (InfraCo plans to break Telkom stranglehold on backhaul bandwidth, MyADSL, 24 May 2007). “The logical conclusion was to intervene to address these national backbone and international connectivity cost structures. This is based on the assumption that if these costs are addressed, Tier 2 (the Local Metropolitan Area network and last mile) connectivity providers would quickly pass this onto the market as a result of competitive pressure” (InfraCo plans to break Telkom stranglehold on backhaul bandwidth, MyADSL, 24 May 2007).
 
In other words, we can expect to see the cost of broadband taking a nosedive in South Africa if InfraCo has its way.
 
What seems to be the problem?
 
Telkom’s running the show.
 
The Broadband InfraCo Bill said: “Investigations into the high broadband costs in South Africa compared to international counterparts revealed that connectivity providers, other than Telkom Limited ("Telkom"), have a cost structure where up to 80% of costs comprise costs attributable to Tier 1 national backbone connectivity and Tier 3 international connectivity, both of which are supplied by Telkom” (InfraCo plans to break Telkom stranglehold on backhaul bandwidth, MyADSL, 24 May 2007).
 
In other words, Telkom’s control of both local and international backhaul bandwidth has not been beneficial to broadband Internet users in South Africa.
 
How will InfraCo manage to bring down the cost of broadband in South Africa?
 
The following factors will help InfraCo to get there:

• Fiber optic network – ‘InfraCo will be using the fiber optic network from Eskom and Transnet to bring more affordable bandwidth to the local telecoms market’ (InfraCo plans to break Telkom stranglehold on backhaul bandwidth, MyADSL, 24 May 2007).
   
  In other words, InfraCo will be utilizing existing fiber optic networks to bring down the cost of bandwidth in South Africa.

• Neotel  – ‘Initially Neotel will have a 4 year exclusivity agreement with InfraCo, but the state may feel that it can influence the pricing levels of bandwidth by controlling a national fiber backhaul network’ (InfraCo plans to break Telkom stranglehold on backhaul bandwidth, MyADSL, 24 May 2007).
   
  In other words, Neotel (SNO) will back InfraCo for at least the first four years.

• Own network – ‘InfraCo further showed interest in building their own submarine fiber cable on the West Coast of Africa which will compete with SAT3’ (InfraCo plans to break Telkom stranglehold on backhaul bandwidth, MyADSL, 24 May 2007).
   
  In other words, InfraCo is planning to build its own network to effectively compete against Telkom.

ADSL South Africa (Broadband South Africa) would welcome any intervention from InfraCo’s side to rectify the situation where Telkom is sitting on all the bandwidth.